Final Income Tax Without Imputation – Election Form and Regulatory Overview
The Regulations, published on 2 September 2025, introduce an elective tax regime whereby qualifying entities may opt to be taxed at a final rate of 15% on their chargeable income, in lieu of the rate prescribed under Article 56(6) of the Income Tax Act, i.e. the standard corporate tax rate of 35%. This legislation offers an alternative to Malta’s traditional imputation system and is strategically aligned with the OECD’s Pillar II global minimum tax initiative. The 15% tax, once taken up, would be final and non-refundable where no tax credit or offset is available at the shareholder level.
The aforementioned 15% rate does not apply to:
- Dividends received from profits that are not allocated to the Final Tax Account of another company registered in Malta; and
- Income that has already been subject to a final tax rate under any other provision of the Income Tax Act and subsequently allocated to the Final Tax Account.
The tax payable under this regime must not result in a lower overall tax burden than what would have been due under the standard full imputation system, including any refundable tax credits, subject to applicable limitations and conditions.
Entities intending to adopt this regime may do so in respect of income accruing or derived as from the Year of Assessment 2025, by submitting the prescribed notice to the MTCA. Once the election is made, it shall apply from the year in which the election is submitted and will remain in force for a minimum period of 5 consecutive years. After the lapse of the said 5 years , an entity can notify MTCA of its intention to revoke the election previously made. Upon the expiration of the said 5 years, an opt-out from the 15% regime will trigger a 5-year lock-out from the Final Income Tax without Imputation regime.
Forvis Mazars’ Interpretation
The newly introduced elective regime offers entities the opportunity to adopt a simplified taxation model, whereby chargeable income is subject to a final tax rate of 15%. This approach eliminates the administrative complexities associated with the full imputation system and the tax refund mechanism.
When considered in the broader context of international tax developments, particularly the OECD’s Pillar II framework and the global minimum tax, this regime may serve as a strategic tool for multinational enterprises and international groups to enhance tax certainty and manage compliance risks more effectively.
The 15% final tax under this regime should not be interpreted as a domestic top-up tax within the meaning of the Pillar II Rules.
